06.29.12 | Financial Aid Changes for 2012-2013

Posted in Financial Aid, Graduate Loans, News, Repayment, Stafford Loan, Student Loans by Student Loan Network Staff

With all this talk of the impending Stafford Loan interest rate hike, many other regulation changes have been overlooked. Starting July 1, there are a handful of other updates to federal loan programs that borrowers should be aware of. These changes will not affect loans that were originated before July 1, only loans originated for 2012–2013.

Here’s a breakdown of what you can expect to see for this upcoming academic year:

Subsidized Stafford Loan Changes

No more subsidized loans for grad. students — Just like undergraduates, graduate students were previously able to receive both subsidized and unsubsidized loans. Starting this year, only unsubsidized loans will be available for grad. students at a 6.8% interest rate.

Elimination of interest subsidy for grace periods — Subsidized Stafford Loans were less expensive than their unsubsidized counterparts because 1) the interest rate was lower and 2) interest was subsidized while enrolled in school and during the 6 month grace period after leaving school. Starting this year, there will be no interest subsidy during grace periods, however, the subsidy will still exist while enrolled in school at least half-time.

UPDATED: Extension of reduced interest rate — As I’m sure most students have heard, a bill was set to expire this year, doubling the rates for Subsidized Stafford Loans to 6.8%. Luckily, Congress just passed a bill to keep the rate at 3.4% for the 2012-2013 year. Learn more about Stafford interest rates, past and present.

08.04.11 | In the News: The Debt Ceiling and Federal Aid Programs

Posted in Financial Aid, News by Student Loan Network Staff

On Tuesday, Obama signed the Budget Control Act of 2011, which raised the national debt ceiling by $900 billion. The legislation also put in place procedures to cut the deficit by nearly $1 trillion over the next few years, potentially including further education cuts. With all of these changes being made to the national budget, many students are wondering how education has been affected NOW. You can find the answers to this below…

  • Pell Grants – Last week we posted a blog about Save Pell Day which discussed a petition to keep Pell funding in the national budget, and Tuesday’s legislation does just that – Pell grants are safe for the 2012 and 2013 fiscal years. The bill includes $17 billion in funds for the two years which will fund awards that are close to the current max of $5,500 per student per semester.
  • Grad Loan Subsidies – Additionally, cuts have been made to other programs, including subsidized graduate loans. The bill eliminates the in-school subsidy for graduate and professional students, to begin July 1, 2012.
  • Loan Repayment Incentives – Extra repayment incentives will also be cut beginning next fiscal year. This includes the auto-debit and interest rebate incentives. As of July 1, 2012, new loans will be ineligible for an interest rate reduction for making automatic payments, and the interest rebate which applies to direct loan origination fees will be eliminated.

Overall, these changes will provide a net total of 4.6 billion in deficit reduction ($21.6 billion reduced, $17 of that redirected to the Pell Grant). It seems that student loans (and Pell Grants) are safe, for now. What this bill does not touch upon is what future cuts will be made. There is still cutting to do to remove the deficit, and while programs are currently safe, we’ll all have to keep an eye out for further changes throughout the year.

Source: http://www.nasfaa.org/advocacy/budget-2012/News/Debt_Ceiling_Law_Provides_$17_Billion_for_Pell_and_Ends_Grad_Student_Loan_Interest_Subsidy.aspx

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07.25.11 | In the News: Today is Save Pell Day!

Posted in Financial Aid by Student Loan Network Staff

While the government continues to argue over budget cuts, students and college presidents are rallying together to ensure saving the much needed Pell grant. Organizations (like Education Trust) are spearheading the Save Pell effort and are urging students to act now to prevent cuts to Pell Grants in states throughout the country.  Today, July 25th, 2011, has been named Save Pell Day as it is the last day you can email your representatives about budget cuts to financial aid. At least 19 states have slashed their higher education budgets, and public college and universities are raising tuition and cutting institutional financial aid. The ones getting squeezed the most are college students and their families, especially those who rely on financial assistance to afford college.

Visit www.savepell.org to sign a petition and learn how to contact your representative.  You can also access their Facebook page, and follow “#savepell” on Twitter. The Save the Pell coalition is asking Pell grant recipients to share their story with others so that everyone can see just how important the grant is.

Learn more about Save Pell Day with this video.

Previous Posts:
Pell Grant Funding and Recent Legislation – 6/30/2011
Last Minute Tuition Hikes and Cuts to Financial Aid Packages – 7/13/2011

06.30.11 | In the News: Pell Grant Funding

Posted in Financial Aid, News by Student Loan Network Staff

gavel on stack of documents

Recent Legislation

It may have come to your attention that because of the federal defecit, legislation is underway to cut funding for federal Pell Grants. When the Department of Defense and Full-Year Continuing Appropriations Act was signed by President Obama, Pell Grants were among the programs to receive cuts, but luckily, not to the extent of other departments.

How were Pell Grants affected?

Overall, the Department of Education saw a cut of $1.3 billion, not substantial compared to the $38 billion in cuts the bill passed overall. Still, Pell Grant maximums remain at $5,550; however, students are now only able to receive one Pell Grant per calendar year (and possibly one for summer courses if eligible) whereas the old regulations allowed two grants per year. As always, the grants remain need-based and available to students who show the most need.

One stipulation of these changes is that students must be able to show academic progression. What does this mean? In order to be eligible for up to 2 Pell Grants in the calendar year, students must have accumulated at least 24 credit hours throughout the Fall 2010 and Spring 2011 semesters, or, if taking summer courses, by the end of the summer semester.

While so far, these have been the only cuts, the House of Representatives has drafted a bill that would cut Pell Grant funding drastically, should it be passed. It is currently being reviewed by the Senate, who will then make suggestions (hopefully decreasing Pell Grant cuts!)

After these recent changes, should you find yourself short on money, you can look into getting a private student loan. While it is best to exhaust all federal options first, getting a private loan can help with a lot of added expenses like books, housing, and fees.

Update – 6/29/2011: New Pell Grant cuts going into effect this Friday, July 1, 2011 will make it so students can no longer take out a second Pell Grant to help pay for summer classes. It turns out that for-profit colleges have been receiving almost 37 percent of the $1.6-billion disbursed for second Pell Grants in 2009-10. This change will greatly affect students who were able to attend for-profit institutions only with the help of Pell Grants.

02.08.11 | Applying for Federal Grants

Posted in FAFSA, Stafford Loan by Student Loan Network Staff

Applying for federal loans is a common task for most college students, but did you know that when you file your FAFSA you’re automatically applying for federal grants as well? Unlike loans, federal grants do not need to be paid back and are both tax and interest-free. By submitting your FAFSA you are considered for a number of grants including:

  • Federal Pell Grants
  • Federal Academic Competitiveness Grants*
  • Federal National Science and Mathematics Access to Retain Talent Grants*
  • Federal Supplemental Education Opportunity Grants
  • Teacher Education Assistance for College and Higher Education Grants

While not all of the grants are need based, you still must qualify in order to receive aid. Eligible students will receive notice of all aid including grants in their Student Aid Report (SAR).

For more information on these grants, check out our page on Federal College Grants and Scholarships at FAFSAOnline.com.

*As of the 2012-2013 school year, these two grant programs are no longer offered by the federal government.

03.08.10 | Pell Grants, in Plain English

Posted in FAFSA, Financial Aid by Student Loan Network Staff

The Pell Grant is an excellent award set up for financially needy students to help afford the cost of college. It is maintained by the federal government, and acts differently than other financial aid offerings.

How does a Pell Grant work?

Pell Grants are based entirely off of the information presented on a student’s Free Application for Federal Student Aid or FAFSA form. They are meant for low-income students, and do not need to be repaid unless the student drops out of their degree program. One additional criteria to qualify for a Pell Grant is that the student must be pursuing his or her first bachelors degree. This means that if you are going back to school for another bachelors or are taking classes casually, you will not qualify for a Pell Grant.

In addition, your school must participate in the Direct Loan or FFEL programs for you to qualify for a Pell Grant. Check with your school’s financial aid department to see if they are approved to receive Pell Grants for their students.

Pell Grant Awards

For the 2010-11 academic year (Fall 2010 to Spring 2011), the maximum you can receive through a Pell Grant award is set at $5,350. As I said before, your individual award is largely based on the information presented in your FAFSA, but also on the total cost of attendance reported by your school. To receive the most you can from the program, you ideally want to show low family income and high cost of attendance at your chosen college.

Because of these very strict requirements, the Pell Grant is typically only seen in the aid reports of very financially-needy students. If you are an independent, low-income student, the chances of receiving one of these awards is much better than if you were reporting the income of family members on your FAFSA as well.

This can be tricky for most students, as you are forced to include your parents’ income on your FAFSA until you are 24 years old. However, if you live apart from your family, don’t have a relationship with them, and support yourself, you can legally emancipate yourself to greatly boost how much need-based financial aid you receive (assuming you are low-income, yourself.) I personally would not recommend this, but if you are in a dire enough situation that you desperately need the financial aid, a legal emancipation will strip away your parents’ ability to report you on their taxes, and therefore lower your income for the purposes of filing your FAFSA and receiving more need-based aid.

10.06.09 | How Do I File My FAFSA when I’m Pregnant?

Posted in FAFSA, Financial Aid by Student Loan Network Staff

fafsa_dependentDid you know the size of your family directly impacts how much federal aid you are eligible for? Essentially the more dependents you have the more aid for school you can qualify for. One question in particular that has resurfaced repeatedly is if I am “expecting” a child may I list the unborn child on my FAFSA?

For example, lets say you were currently a family of three (mother, father, and child), and a second child was on the way. Are you allowed to list that expecting child on your FAFSA making you a family of four?  The answer is yes, provided the unborn child is born before the end of the award year (June 30) and that the mother will be providing more than half support for the child.

It is important to note that if for some terrible reason the expecting mother was to lose her baby, either before or after birth, the child must be removed from the household size.

Below is an excerpt from the FSA Handbook which covers dependent status…

- “The student’s children, regardless of where they live, if they will
receive more than half of their support from the student from
July 1, 2009, through June 30, 2010. This includes the student’s
unborn children who will be born during the award year and
will receive more than half their support from the student from
birth to the end of the award year. Foster children do not count
in household size.”

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09.21.09 | How do Stepparents Factor into the FAFSA?

Posted in FAFSA by Student Loan Network Staff

Stepparents may not be obligated to aid you with your studies, but that doesn’t mean their financial details are not required.

I realize that probably doesn’t sound fair to you – that someone who doesn’t contribute a single dime toward your college education is calculated into the FAFSA, but it really does make sense. His or her income and assets represent significant information about families resources as a whole.

Perhaps this stepparent helps pay the mortgage, put food on the table, or pays the electric or gas bill.  These may sound like basic necessities, which they are, but it is all part of the cumulative family picture that the Department of Education is examining when considering all applicants for federal aid.

08.05.09 | Pell Grant vs. Cash for Clunkers Program

Posted in FAFSA by Student Loan Network Staff

Wednesday Rant

Sometimes I wish I was young and naive and didn’t fully understand the implications of government programs like cash for clunkers, which was just extended through Labor Day on Tuesday. Personally I’m all about appreciating assets, not depreciating.

If we’re going to fork over up to $4,500 to anyone shouldn’t it be the students of tomorrow? Students are appreciating assets that will presumably help raise our nations GDP per capita with a solid education under their belt. But instead we’re handing over these discounts/rebates to those driving 15-year old pickup trucks. What am I missing?

Don’t get me wrong, I’m happy for Joe the plumbers cousin Joe Pickup, but when he turns in his old truck to claim his rebate who do you think is paying for that? We the taxpayers are. And while there will be a temporary spike in sales, which will help the economy, that will level off and we will be left to foot the super sized bill.

In contrast the President signed off on an Economic Stimulus bill which increased Pell Grant money by around $600 per student earlier this year. It was met with rave reviews at the time, but seeing a program like cash for clunkers offering $3,500 to $4,500 for your old pickup makes me scratch my head at our nations priorities.

I don’t know about you, but I’d much rather invest in the future of this great nation opposed to those driving gas guzzlers. Until that happens I guess we’ll all just keep on trucking – one clunker at a time.

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06.17.09 | Repay your federal grant!

Posted in FAFSA, Financial Aid by Student Loan Network Staff

By definition, to grant means to give or transfer. So if you are given a grant, why do you need to pay it back? I thought grants were essentially free money? Don’t worry. Most grants do not require repayment, but if you do not meet the conditions of the grant be prepared to pay.

If you complete your FAFSA and are awarded a Pell grant you must attend at least 60% of the semester before you are one hundred percent vested in your federal aid award for that semester. If you withdraw from all your classes before you have completed at least 60% of the semester the college must then determine what portion of your federal aid you are entitled to. Essentially, they take money away from you which you then need to repay to the school.

If you read the fine print on the federal TEACH Grant, which is a grant providing up to $4,000 per year in grant assistance to students who are completing or plan to complete course work needed to begin a career in teaching, you will notice that in exchange for the grant, a student must sign an agreement to serve as a full-time teacher at certain low-income schools within certain high-need fields for at least four academic years within eight years of completing their course of study. If you fail to honor your commitment your grant is converted to an unsubsidized Stafford loan and must be re-payed.

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